Engage Digital Media, a leading producer of trade events and media that focuses on social media, virtual worlds, user engagement and games, recently reported that investments and acquisitions in virtual goods-related companies tripled in 2009. In 2009, 87 Virtual goods companies raked in more than $1.38 billion as compared to 2008 when 34 companies received $408 million. In 2009, the virtual goods market was reportedly $1 billion in the US alone and $7 billion in Asia. And by all accounts, this growth is accelerating. According to a report from Inside Network, US virtual goods sales will increase to $1.6 billion in 2010. These numbers do not include the value of branded virtual goods which are often given away for free.

Noted virtual worlds analyst, Jeremy Liew, a managing director at Lightspeed Venture Partners, predicts that one of the trends to watch for 2010 is brand advertising starting to move more online. This prediction is already proving prescient. For example, Coca-cola recently announced a free virtual gift campaign to promote the launch of its Super Bowl ads. Participating users can send virtual Coke bottles to their Facebook friends. In return, the user can watch a preview of the Coca-Cola Super Bowl ads and for each virtual coke sent, Coca-Cola will make a real $1 donation to the Boys & Girls Clubs of America.

These and other signs are pointing to a rapid increase in the use of virtual goods, including by well know brands. With these tremendous opportunities come legal issues to protect the brands and minimize liability. Pillsbury’s Virtual Worlds Team has prepared an FAQ which explains virtual goods, including some of the business opportunities and legal issues surrounding them. For further information, please contact our Virtual Worlds and Video Games team.